Section -8 Non-Profit Organisation

Advantages

Limited Liability Protection
to Director’s personal assets
For social welfare activities
Tax Benefits and Rebates
Best option for opening NGO
Less Procedural Compliances

Minimum Requirements

Minimum Two Directors
Minimum Two Shareholders
No Minimum Capital required
Maximum Fifteen Directors
One Director shall be
Indian resident

Introduction

The Section 8 Company means a Company formed with an object to promote commerce, art, science, sports, research, education, religion, protection of the environment, charity or any other object, who intends to apply their income and profits in promoting their objects and prohibits the payment of dividend to its members.

Governing Act:

In India, Section-8 Company is regulated by the Indian Companies Act, 2013 (and the amendments thereof) and the rules & regulations that are made thereunder and is administered by the Ministry of Corporate Affairs, Government of India through the Offices of Registrar of Companies (‘RoC’).

Section 8 Companies are similar to a Trust or Society as the Societies and Trusts are registered under the State Government regulations whereas Section 8 Company is registered under the Central Government’s “Ministry of Corporate Affairs (MCA)”.
This, however, has various advantages when it is compared to Trust or Society and it also has higher credibility amongst the donors, Government departments, and other stakeholders. There is no requirement to use the word “Limited” or “Private Limited” as the case may be.

Benefits of Section-8 Company

No requirement of minimum paid-up capital.
Exempted from stamp duty while registering.
Tax deductions benefits u/s 12AA and u/s 80G of Income Tax Act to the donors of the company
Firms can also become its Members
Less procedural Compliance than other entities

Requirements for the Incorporation of Section 8 Company

Companies Act, 2013 has listed the following requirements for the incorporation of a Section 8 company

1. Document Required

Minimum 2 Directors

Minimum Number of Members: Two/Seven (Two if it is proposed to be incorporated as Private Limited and Seven in case of Public Company) Minimum Number of Directors: Two/Three (Two if it is proposed to be incorporated as Private Limited and Three in case of Public Company)

PAN Card

Self-attested PAN Card of Members and Directors.

Identity Proof of Directors

Self-attested ID proof of Members and Directors- (Anyone out of the following -Valid Passport/Voter ID/Aadhar Card/Valid Driving License)

Address Proof

Self-attested Address Proof of Members and Directors and Should Not be Older than 2 Months (Anyone out of the following – Bank Statement/Electricity Bill/Telephone Bill/Mobile Bill)

Passport Size Photo

Passport Size Photo 2-2 Passport Size Colored Photos of Members and Directors.

Business Address Proof (Owned/Rent/Leased)

NOC from the Owner of Property/Property Papers (Title Deed)/Utility Bill (Either Electricity Bill or Mobile Bill or Telephone Bill) (Should Not be Older than 2 Months)

2. Requirement of Information:

Authorized and Paid-up Share Capital of the Proposed Company and Number of Shares Subscribed by Members.
Explanation: A Company can be started with the minimum capital of Rs. 500000/- and 10 members and shall be treated as a Public company.

Place of Birth and Duration of Stay of Members and Directors at Present Residential Address.
Occupation of Members and Directors.
Proposed Object/Business of the Proposed Company.
Educational Qualification of Members and Directors.
Email IDs and Contact Number of Members and Directors.

Process of Registration

The Ministry of Corporate Affairs vides its notification dated 18th February 2020 effective from 23rd February 2020 has further amended the Companies (Incorporation) Rules, 2014 thereby substituting the old Form INC-32 (SPICe) with web service SPICe+ along with certain other amendments.

1. Application for Reservation
The first step is to make an application for reservation of name which shall be reserved by using the web services (SPICe+) available at www.mca.gov.in along with the specified fees. Before Applying for a name, kindly check that the name is available on MCA as well as no trademark. Is there no such name under the Class of work you are going to apply.
The new integrated form consists of two parts i.e. PART A and Part B. The Name(s) of a company can be reserved in Part A of SPICe+. In case the applicant wants to apply for name, incorporation and other integrated services together, he can do so together by filling necessary information in Part A and Part B.

2. Fill the Part B of SPICe+
The second step is to fill the Part B of SPICe+ for registering the Company. The said form contains various sections which allow you to save and modify information if required. while filling the said sections following attachments are required to be attached:-

Memorandum of Association in Form INC-13
Articles of Association
Declaration in INC-14 by any CS/CA/CMA in practice stating that the draft memorandum and articles of association have been drawn up in conformity with the provisions of Section 8 of the Act and Rules made thereunder
Estimation of the future annual income and expenditure of the company for the next 3 years, specifying the sources of the income and the objects of the expenditure
Grounds on which the application is made
Brief description of the proposed activity
Statement of assets and liabilities
Declaration by each of the persons making the application in Form INC-15 i.e. a declaration that draft memorandum and articles of association have been drawn up in conformity with the provisions of Section 8 of the Act and Rules made thereunder
List of promoters (name, address, DIN or Income Tax PAN)
List of proposed directors (name, address, DIN or Income Tax PAN
Application for Licence
Consent to act as Director in DIR-2

3. Convert SPICe+ Form into PDF
The third step is to convert the SPICe+ form into a pdf format to affix the DSC.

4. Fill AGILE-PRO
The fourth step is to fill the AGILE-PRO, where certain changes have been introduced which are as follows:-

Mandatory registration of EPFO and ESIC.
Mandatory opening of Bank accounts.
Facility to obtain the GSTIN using the said form.

The said form is also required to be converted into pdf form and DSC is to be affixed.

5. Upload Forms on MCA
After affixing the DSC on the said forms are required to be uploaded on the Ministry of Corporate Affairs in accordance with the existing process.

6. Declare Company’s Subscribers & First Directors
Declaration of all Subscribers and first Directors of the company which is currently being filed in Form INC-9 will be automatically generated in pdf format and shall be submitted only through Electronic form.

After the registration, the section-8 company can easily promote the respective fields such as commerce, art, sports or environment safety or whatever it is working for. Besides, the company registered under Section-8 need not pay any dividend to its members and the company still gets all the benefits of limited companies.
Feel free to contact us for more information about Section 8 company registration